China coal hub Shanxi to merge five giant state-owned miners as part of efficiency drive

Name: 16 miners killed, one rescued after fire in coal mine in Chongqing, China
Uploaded: 2020-10-06T11:44:55.000Z
Duration: 1 min
Description: 16 miners killed, one rescued after fire in coal mine in Chongqing, China

Shanxi province will merge five coal companies into a single entity called Jinneng Holding Group, creating the country’s second largest coal producer

Government-led merger, which involves trillions of yuan in assets and thousands of employees, is the latest effort to improve efficiency in the coal industry

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Beijing is trying to improve efficiency in China’s coal industry, which produced 3.85 billion tonnes of coal last year. Photo: Reuters

Sidney LengandSu-Lin Tan

Published: 7:44pm, 6 Oct 2020Updated: 11:03pm, 6 Oct 2020

China’s coal-rich Shanxi province will consolidate five large state-owned companies into a mega coal producer, with annual output nearly matching that of Australia, in a deal that is set to reshape the nation’s coal industry.

The move, aimed at increasing efficiency in China’s fragmented coal industry, is part of Beijing’s drive to improve the operation of state-owned enterprises, which are still considered the backbone of the economy.

The provincial government of Shanxi will amalgamate the five coal companies into a single entity called Jinneng Holding Group, according to an official notice published last week by Jinneng Group, the coal power conglomerate leading the consolidation.

The new holding company will also absorb assets from Datong Coal Mine Group, Shanxi Jincheng Anthracite Mining Group, a new company founded by Yangquan Coal Industry Group and Shanxi Lu’an Mining Industry Group. Three firms – Datong, Yangquan and Lu’an – are on the 2020 Fortune 500 list of the world’s largest enterprises ranked by sales revenues.

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16 miners killed, one rescued after fire in coal mine in Chongqing, China

The Taiyuan Coal Exchange Centre, China’s largest coal market, will also become part of the new entity.

The consolidated company is expected to become the country’s second largest coal producer after China Energy Investment, which produced about 515 million tonnes of coal in 2019. The five Shanxi coal mines jointly produced about 420 million tonnes of coal last year, according to data from the government-backed China National Coal Association.

In comparison, total coal production in India – the world’s second largest coal producer – was 729 million tonnes in 2019, while the United States, the world’s third largest coal producer, produced 706 million tonnes. Australia produced about 500 million tonnes last year.

The government-led merger, which involves trillions of yuan in assets and thousands of employees, is the latest effort by authorities to improve efficiency in China’s coal industry, which produced 3.85 billion tonnes of coal last year. It also comes after China pledged to reach carbon neutrality by 2060, which will require a transition away from fossil fuels.

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